Investor Report Mexico: Auto focus

Mexico’s manufacturing sector is poised for a significant boost – provided the US economy doesn’t falter

By Ivan Castano

Mexico’s manufacturing output should grow
3.5%-4% in 2012, despite concerns that slowing US demand could
hit production in the second half, according to leading
economists.

The fast-growing automotive, electronics and aerospace
industries are expected to fuel the hike, they say, adding that
foreign direct investment is seen matching or exceeding last
year’s levels.

Even though the US ISM manufacturing index fell sharply to
49.7 points in June, the decline is unlikely to trigger a sharp
drop in the IMEF Mexican manufacturing.

"We have seen strong demand from the US this year and this
should continue through the remainder of the year," says Juan
Lorenzo Maldonado, an economist at Roubini Global Economics.
"We don’t expect a sharp drop in Mexican
manufacturing in the second quarter."

But the risks of a slump could increase in 2013 amid signs
that US and European economies...